December 4, 2020
The future of the United States dollar
The US economy and the power of the dollar have been unmatched since the time of the Bretton Woods agreement. The privilege of having the dollar serve as the global reserve currency enables the United States to weaponize its currency and leverage effective sanctions on rogue nations such as North Korea and Iran. However, some of the same strategies have not worked in relation to other important global players such as China.
As long as the United States still approaches the table with the wrong playbook, the country’s rivals, new and old—from malignant cyber threats to distant terrorist entities to emerging regional powers—will continue to hold the upper hand.
It is critical that the United States continues to look forward and prepare for the future. This report provides a comprehensive overview of the impact of COVID on economic statecraft, the role of the dollar in great power competition, and the era of digital currencies.
The future will need not only a radical rethinking of Washington’s sanctions strategy, but also a new approach to the field of financial statecraft and diplomacy as a whole.
In a time of crisis and change, sanctions strategy must be re-evaluated, Washington’s tool box must expand, and the implications of digital currencies must be considered. The United States has seen the wide-ranging impacts and significant influence that financial diplomacy can have on shaping the world order. A constantly evolving approach to competition with China and a renewed transatlantic partnership will be necessary to hold continued access to this vital position.
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At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.